The File on Citadel’s Ken Griffin

He’s the billionaire founder of the Chicago-based hedge fund Citadel. He’s also a philanthropist, a political player, a benefactor of the arts—and a person with a penchant for privacy. So who exactly is Kenneth Cordele Griffin? We scoured public documents, financial records, and other sources to come up with the answer

By Graham Meyer

Published June 8, 2011

(page 11 of 12)

FORMER CITADEL EMPLOYEES

Hedge funds, especially the math-focused quant funds such as Citadel, have a reputation for hiring the best and brightest. Citadel employees have frequently followed their boss’s entrepreneurial spirit and struck out on their own, founding new financial firms, including Polygon Investment Partners, Headlands Technologies, Senrigan Master Fund, RoundKeep Capital Advisors, Whiteside Energy, Steeplechase Group, and Abax Global Capital. Griffin told the Chicago Tribune in 2006, “I hope in 15 or 20 years we’ll have the same reputation that General Electric had: People have great careers at Citadel, and if they leave, they have great careers elsewhere.” Not every Citadel vet has had smooth sailing, however:

ALEC LITOWITZ An employee until 2003, Litowitz created the Evanston-based hedge fund Magnetar in 2005. The website ProPublica reported that Magnetar provided key funding for collateralized debt obligations (CDOs) backed by mortgages before the financial crisis while also betting that CDOs would fail. When mortgage-backed securities began tanking in 2007, Magnetar’s fund with the greatest exposure to CDO trades went up 76 percent, according to ProPublica. In November 2010, ProPublica reported that the Securities and Exchange Commission is investigating Magnetar’s CDO transactions.

MIKHAIL MALYSHEV Malyshev, known as Misha, left Citadel in February 2009 along with Jace Kohlmeier to form Teza Technologies. Citadel sued Malyshev and Kohlmeier in July 2009, claiming they violated their contractual noncompete clause. After discovering that Malyshev had used scrubbing software to erase files on his home computer even though he had been told not to, Judge Mary Rochford penalized him $1.1 million, payable to two Chicago charities. Rochford was unconvinced by Malyshev’s argument that he was only deleting pornography.

JULIO DePIETRO After 11 years working on convertible bonds, DePietro left Citadel in 2003 to become a filmmaker. He wrote and directed the 2009 feature The Good Guy, starring Anna Chlumsky, Alexis Bledel, and Andrew McCarthy. An excerpt from Roger Ebert’s review encapsulates the movie’s tepid reception: “Will you like ‘The Good Guy’? I think you might.”